Bernanke: Fed OKd new stimulus because unemployment is 'grave concern'

WASHINGTON -- Federal Reserve Chairman Ben S. Bernanke said "grave concern" about the nation's high unemployment rate led the central bank to launch another round of stimulus, and that the aggressive open-ended program underscores a commitment to the economic recovery.

"We've seen not enough jobs growth to bring down the unemployment rate, and what we need to see is more progress," Bernanke said. The Fed would continue with its stimulus "until we do," he said.

"We're just trying to get the economy moving in the right direction, so we don't stagnate at high levels of unemployment," Bernanke said Thursday at his quarterly news conference, which followed the Fed's announcement of its new stimulus effort.

The Fed said Thursday it would buy $40 billion a month in mortgage-backed securities until the outlook for the labor market improves substantially.

Bernanke said the program "should increase downward pressure on interest rates," particularly mortgage rates, which would encourage more home sales and refinancing.

He would not give a specific level of unemployment the Fed was aiming for, but said the goal was not to continue the purchases until the labor market was at a full employment rate of about 6%. The unemployment rate in August was 8.1%.

"There's not a specific number we have in mind, but what we've seen in the last six months isn't it," he said. "We're looking for something that involves unemployment coming down in a sustained way."

Responding to criticism that the Fed's actions were hurting savers by keeping interest rates low, Bernanke said there are benefits to the rates. Low interest rates help the value of homes and business, he said.

And though the rates do harm people with certificates of deposit and other savings, Bernanke said, "It's difficult to save for retirement and other goals without the income from a job."